USA: Government ‘weeks from debt default’ – seeks to raise debt spending level beyond $17 trillion

February 2014ECONOMYThe United States Congress has been warned the federal government could start missing payments on its bills from 27 February if the limit on borrowing is not increased. Treasury secretary Jack Lew said measures approved by President Barack Obama’s administration aimed at staving off a default would only allow three weeks’ leeway thereafter. A 16-day federal shutdown in October cost US taxpayers about $2 billion (£1.22bn) in lost productivity and laid off 850,000 employees. It was triggered because the House of Representatives, controlled by the Republicans, and the Senate, controlled by Obama’s Democrats, could not agree on borrowing levels. Rows were focused on funding for the landmark “Obamacare” health act, the biggest shake-up of the US paid-for healthcare system since the 1960s. The Republicans eventually relented in the face of public anger and approved funding until this month. By 27 February, when those funding measures are again exhausted, the government anticipates having roughly $50bn in cash which it would have to burn through to pay its bills. The money would not last long, the administration said. “Any foreseeable cash balance would be exhausted quickly,” Lew warned in the letter to House leaders. It would then “be impossible for our nation to meet all of its obligations,” he added. Since 2011, politicians, particularly the right-wing Tea Party in Republican ranks, have balked at raising the borrowing ceiling amid a debate over America’s long-term fiscal health, with the Democrats and Republicans at odds over the need for tax increases versus spending cuts. Gridlock over the debt ceiling has brought the US perilously close to default, rattling financial markets. Businesses fear greater uncertainty will increase borrowing costs. Some Republicans are eager to extract concessions from Obama in return for lifting the debt limit, but they are not agreed on their demands.
 Republicans have penciled in a possible vote on the borrowing cap for this week. “I respectfully urge Congress to move as quickly as possible to raise the debt limit,” Lew said. Republican House leader Eric Cantor said on Friday he would leave a slot open in his weekly schedule for “possible consideration of the legislation related to the debt limit” on Wednesday – a sign that his party may be ready to put forward its demands to permit the $16.7 trillion borrowing cap to be increased. Some Republicans and aides said possible conditions include the elimination of military pension cuts approved in December. These would be a far cry from past demands for big cuts and might be acceptable to the Democrats. The Senate is set to begin considering a bill this week that would eliminate pension cuts for able-bodied military retirees of working age, which may satisfy the Republicans, though it is unclear how this would be funded. Unlike past disputes over the borrowing limit, the Republicans seem keen to avoid being seen as too partisan or threatening, a posture which would unsettle the markets. If the US government started missing payments, the rapid contraction in spending would weigh heavily, possibly triggering a financial panic and a full-blown recession. An influential group of American chief executives has urged Congress to swiftly pass a debt limit increase. “Any default by the federal government on its debts would cause devastating, long-lasting effects for all Americans,” AT&T chairman Randall Stephenson and United Technologies Corp chairman Louis Chenevert said in a letter to leaders. The House has only seven more legislative days scheduled through to the end of February in which to pass a debit-limit increase. –Scotsman
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This entry was posted in Age of Decadence, Apathy, Anger, Mistrust, Disillusionment, Austerity, Bankruptcy, Boom and Bust Cycles, Depression and Anxiety, Economic Collapse, Economic Hardship or Loss, Fiat Money Printing Fiasco, Financial market turmoil, Geopolitical Crisis, Greed and Corruption, Hierarchal Control, Political Corruption, Political turmoil, Unemployment rising, Unsustainable Debt Burden, Widening gap between rich and poor. Bookmark the permalink.

5 Responses to USA: Government ‘weeks from debt default’ – seeks to raise debt spending level beyond $17 trillion

  1. Joseph Sonny Skies says:

    …and every time the debt ceiling is raised inflation fires up some more; all the while health care costs are sky rocketing because health insurance is becoming nearly extinct and is being replaced with pay as you go super high deduction ” saving” plans. The economy is shrinking as wages are stagnant when compared with inflation’s upward spiral. Something is going to break soon as fewer and fewer families will be able to cover basic bills, many non essential businesses will lose money and many hospitals and doctors will falter financially. Fewer people will then enter the medical field because the income lost to those who just cannot pay will mean astronomical college bills for these medical degrees will be less lucrative…and this is just the tip of the iceberg.

  2. niebo says:

    Dudes, like, call me paranoidal, but, I mean, like, wow, man, does it seem like somebody somewhere is somehow , you know, doing something on purpose to smash this economy thing? I mean, it’s like the politicos are fighting over the worst decision, how to hit bottom first, while the dudes like Cruz (dig yer name, bro) are the bad guys for tryin to slow our rate of smash. I mean, are we in a race to oblivion, here? And who are we racin’? Come on, I mean, I ain’t no genius so, for real, this is like speculative on my part, and we can all agree on some level that speculatiivity is part of the problem, but like, you dudes would NEVER give me all your money to be speculativital with, and I would never ask cuz, well, I gotta use my toes to count, sometimes, you know, and, so, like, I got my hands full miscounting my own dollars, and, well, I wonder if these dudes do, too, you know? I mean, come on, they call it a “ceiling” but, like, debt is like a “debit”, yeah, and debit means “takeaway” cuz it’s a big negatory, so you use the – takeaway sign, not the + additative sign cuz it ain’t gettin’ pository, so, whatever stack of dollars they’re talking about ain’t growing, ain’t gettin’ taller; it’s gettin’ shorter, by, like, bunches, so why do they got us all lookin’ up at the ceiling like that’s where all those ‘negatory’ dollars are? We should be looking at the floor, cuz all that debt is a hole, yeah? And I can only speak for me (and for my kitten, Jackhammer), but, from here, you punch through the floor into the neighbor’s apartment (Dude! Are you eating brownies! Be right down!), which ain’t so bad, but if you keep going into Old Lady Johnson’s apartment (Hey! What’s that smell? Is that reefer?”) then into her downstair’s neighbor’s apartment, you end up where the manager lives, and . . . he is looking at me holding my bong, and, see, it’s hard to even imaginate anything but ungood here. So, yeah, it’s a debt hole, one that somebody has to be making on purpose, because the only thing that comes from cutting through to Mr. Baxter’s place is a swift eviction and a hefty repair bill. And maybe the cops show up. Right? So, what are they thinking? Do they want us all to be hopelessly indebtified? Or do they want us all to be homeless? Or both? .

    • Utopia: the Collapse says:

      I think we’re heading for some very dangerous times, and I think its going to take the world mostly by surprise. Fearful and terrible are the events now unfolding across the face of nations.

      Alvin

      • niebo says:

        Yes, sir, hence my “mining hell” for humor; the world-wide, conspicuous, unrestrained spending has the hallmarks of willful intent . . . to sow chaos, collapse, bloodshed, and, in the end, slavery. Within the last few weeks, there is evidence that the PTB are losing control of the propaganda machines; people are waking to the smoke and mirrors, to the shell games, the bloodletting of middle-class “wealth”. That people are asking questions edifies the optimist in me, but the realist and the pessimist agree: we “crash”, even now, so grab onto something.

        Come, Lord Jesus. Please.

    • karynchrystine says:

      Both.

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